Distell buys share in Chinese distribution co

South Africa-based liquor company, Distell is expanding its presence in China with the acquisition of a 60% share in liquor distribution company CJ Wines & Spirits.

Privately owned, CJ is based in Zhongshan in the Pearl Valley Delta of Guandong Province and has operations in Hong Kong, Macau and Mainland China. The stake has been purchased for an undisclosed sum.

The new venture, now trading as Distell China, is headed by MD Rody Wong, who previously ran CJ Wines & Spirits. Wong, a former Apple and Seagram executive, who has worked in the US and Asia, is said to have established a strong support base for cognac brand Bisquit which Distell purchased in 2009.

Wong says that Distell China’s focus will initially be on building the presence of Bisquit in the southern part of the country. South China is referred to as the country’s “cognac belt” as this is where most cognac is consumed. Exports of cognac to China are “surging” according to French trade body Bureau National Interprofessionel du Cognac (BNIC).

The BNIC reported that for the 12 months to June 2012, year-on-year volume and value levels exceeded all past records, with producers shipping the equivalent of 168.5 million bottles of cognac, worth US$2.8 billion. Demand in the Far East has outpaced other regions, where volumes rose 9.9% and a value, by 21.4%. Asian countries imported 61.8 million bottles of cognac during the period.

The Far East is now the world's biggest importer of cognac, with turnover exceeding US$1,25 billion.

Wong said: “The partnership with Distell creates the opportunity to accelerate the excellent progress achieved thus far with two of the company’s major brands Bisquit and Amarula. CJ’s conversancy with the cognac market is an important asset, and we plan to bring this expertise in marketing to retail and on-consumption channels, to Amarula which is currently one of the fastest-growing spirits brands worldwide.”

According to Distell Group MD, Jan Scannell, the plan is to capitalise on the strong market potential of South China and then address markets such as Beijing, Shanghai and Chengdu. “The new venture will carry spirits and wines from around the world, and that obviously gives us the scope to explore avenues for some of our other brands.”

He said that the priority for Distell China was to focus on Bisquit and Amarula before considering other brands within the company’s portfolio for distribution.